Monday, July 22, 2019

M1 Finance Experiment

i have been experimenting with m1 finance. the goal of the experiment is two-fold. first, to implement some investing advice from my dad. second, to build it up from the smallest possible increments to demonstrate how feasible this is for many people.

m1 finance is a commission-free brokerage. their unique value proposition is that they transact fractional shares of stocks and etf's- as small as 1/10,000th of a share. this enables some interesting possibilities, such as direct ownership of the DOW 30 stocks in a small account with a weighting of your own choosing and no expense ratio.

my dad has been telling me for years that he simply buys what's in the valueLine model portfolio 1. valueLine is a well respected stock research firm that publishes in print and is freely available in the reference section of most libraries. they maintain 4 different 'model' portfolio's oriented towards different investment goals: 
  1.  stocks that have above-average year-ahead price potential
  2. stocks for income and growth
  3. stocks with long-term price potential
  4. stocks for income
but it's mp1 that he says he has done well with. i couldn't get him to tell me what that meant percentage-wise and some of the stocks in mp1 are expensive, such as GOOG, a triple digit stock. so i have been curious but not ready to jump in. m1_finance changes this picture by allowing me to invest just a couple of dollars in GOOG and to manage the weighting of such a high-flier stock in a 20 stock portfolio. 

the second goal was to execute a dollar cost average into mp1 as small as m1_ finance would allow. their minimum initial funding is only $100 and that doesn't break my budget. also, their minimum addition is just $10, and i think i can swing putting $10/week into this thing. 

that was a month ago, so here's what this looks like today after 5 weekly additions:

$1.55 is small beginnings. 1.26% return in month annualizes to 15.12% which is not earth-shattering but it is early days and the summertime is seasonally slow for stocks and, hell, that is at least a year's worth of interest in a savings account. i will continue with the weekly contributions and reserve judgement for now. you can see exactly what is in this pie and how i have allocated the slices. it's not equal weighted but there is a method to the madness. 

if you don't have an m1 finance account and want one, i would be honored if you used my referral link and if you fund an account before the end of July 2019 we both will get a $20 cash reward deposited into the account.


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